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EA fails to earn a profit in Q2, but losses not as bad as expected

EA fails to earn a profit in Q2, but losses not as bad as expected

November 1, 2016 | By Alex Wawro




Today Electronic Arts reported better-than-expected earnings for its most recent quarter, the three-month period ended September 30, 2016, but reportedly lost a bit of investor confidence by setting lower-than-expected earnings targets for the upcoming holiday quarter.

The company posted a $38 million loss on $898 million in revenue (GAAP) for the second quarter of its 2017 fiscal year, which is a bit less of a loss than EA had predicted -- the loss per share was roughly 13 cents vs. an estimate of 17 cents. The chief driver of sales, according to EA, was FIFA 17.

“Net sales in the quarter were better than expected driven by outperformance in FIFA, and supported by strong year-on-year growth in mobile,” stated company CFO Blake Jorgensen in the earnings report. “We are raising our annual guidance today based on the strength of our holiday slate and FIFA 17's strong performance to date.” 

Devs may be interested to note that the digital/packaged split on that revenue was roughly 63/37, meaning that the majority -- roughly $566 million -- of it came from sales of digitally-distributed goods.

Incidentally, this is the first earnings report which EA has chosen to report earnings in accordance with GAAP (generally accepted accounting principles); in previous quarters, the company has reported Non-GAAP numbers. Put simply, that means you can't fairly compare earlier Non-GAAP reports of EA earnings against these GAAP numbers, as the GAAP numbers don't reflect deferred revenue from EA games with online components.

Looking ahead, EA has raised its full-year earnings expectations of $1.06 billion in profits on $4.78 billion in revenue. However, like most game companies EA's financial year ends next March; for its upcoming third quarter (which encompasses the holiday season), EA predicts a $66 million loss on $1.13 billion in revenues.



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